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Issue #496 : : November 21, 2006 |
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C o n t e n t s
Synergis
Calls In the Media |
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Synergis Software has been around for 15 years, keeping a somewhat low profile. But this year the company wanted to get its software noticed beyond issuing press releases and attending trade shows. It invited the CAD press to a Media Day, a surefire way to get a lot of attention in a brief time – provided, of course, any members of the CAD press agree to show up. Seven of us did, flying into Allentown-Bethlehem airport (which has free wireless Internet throughout). Roopinder Tara, editor at Tenlinks.com, counted up 84 products for managing CAD drawings. CAD vendors are increasing their presence in the markets. Those are two reasons for Synergis needing to stick out from the crowd.
History of Synergis Synergis began in 1985 as one of the first AutoCAD dealers. Their Engineering Solutions division continues to sell Autodesk software in manufacturing, building, civil/GIS, and academic markets. Scott Paper installed a 3COM network in 1990, but it couldn’t get AutoCAD to work. (I was at CADalyst magazine at the time when 3COM offered to install a network connecting computers to the laser printers. When it took a half-hour to print a single page, and the 3COM techies couldn’t figure it out, we had them tear it out again.) The problem was that networking software took up a lot of RAM, AutoCAD demanded a lot of RAM, and the two could not co-exist in 0.64MB of RAM – the maximum allowed in those days. A Synergis techie figured out how to strip AutoCAD down enough to run on the network. Then Scott Paper got a big set of electronic drawings for a new paper machine, and needed software to control them. Synergis got called in again, and wrote the Adept software to keep track of the drawings. Synergis got more experience with drawing management from installing Autodesk’s short-lived WorkCenter software (more on that later). Since then, Synergis has continued with two divisions: one that sells Autodesk software, and the other that updates Adept. The company now has 27,000 users of its software at 600 companies. It’s looking at making US$17 million this year with its 92 employees.
Adept and Its Cousins When one CAD journalist asked what Adept meant, I volunteered “a digital electronic paperwork tracker.” It keeps drawings sorted by project, it allows the CAD manager to assign rights, and it allows CAD operators to search for drawings by a variety of methods. In the background, Adept runs on SQL [structured query language] databases. You would want to use this class of software for controlling revisions, specifying workflows, reusing old drawings, managing relationships between files, and enforcing CAD standards. It takes one-two weeks to install Adept is now at version 7, and reads data contained in AutoCAD, Inventor, SolidWorks, Word, and Excel files. (It also has a Cimmetry Systems viewer embedded to view 400 or so other file formats.) CAD users are most familiar with Windows Explorer as their file manager, so Adept shows a Explorer-like tree as one of its interfaces. To go along with Adept running on the desktop, Synergis has a new Web-based version called Adept Explorer. It allows access to the database from any Web browser: view, print, redline, copy, and assign/unassign files. So far, it’s limited to running in Internet Explorer on Windows. Also new is PrintWave, a print server for generating consistent-looking prints and PDFs. Adept is US$1,300 per floating license; Explorer is $800 each; and PrintWave is $6,000 per server. Maintenance (upgrades and support) is 25% per year. Explorer and PrintWave ship in Q1 of next year.
User Stories A couple of users gave their story. One firm designs custom valves in six countries. They were stuck on AutoCAD Release 14, because they had installed WorkCenter to manage drawings. When Autodesk gave up on WorkCenter (handing it over to Motiva, who later went out of business), this company was forced to continue using R14, because WorkCenter was no longer updated. Two years ago, they decided to update their CAD software, but refused to consider Inventor, because of being irritated by years of pressure to upgrade by Autodesk representatives. They decided on Adept, because (1) it supports both AutoCAD and SolidWorks; and (2) its overall cost of ownership appears to be lower than the 83 competitors. Some of the other advantages include compressed FTP for faster transfer to slow-Internet regions of the world, works with SQL, flexible licensing, and works across continents. Also, the Adept database is unencrypted: its designed to be ripped out, should a firm want to switch to a different product. The other user story was from the US Coast Guard, the largest user of Adept, and desperately working (for years) on centralizing all data. The USCG is proud of its consistency of operations, an attribute that allowed it to begin work in the Hurricane Katrina-devastated areas as soon as the wind died to 45mph.
For the Future Synpergis vp of R&D, Todd Cummings, gave some clues about future directions:
Adept 8 is expected in a year from now, with support for MicroStation and a more powerful BOM [bill of material].
Links: http://www.synergis-adept.com
[Disclosure: Synergis Software provided air transportation, hotel accommodation, meals, and corporate gifts.]
ADSK continues to lead the CAD software pack in total revenues, reaching US$457 million in Q3 [Aug-Oct], up 21% over a year ago. For the year, the company predicts that its revenues will be between US$1.832 and $1.842 billion; for next year, $2.075 - $2.125 billion. The stock backdating problem continues to be trouble, with net income unreported last and this quarter. It's costing Autodesk nearly $4 million on outside investigators, and costs may rise as two law firms have announced their hopes in cashing in on the company's indiscretion. In milestone news, the installed base of AutoCAD broke the four-million mark. Since it began selling AutoCAD 1.0 in Dec '82, Autodesk has licensed 4,056,200 copies of the software, as of Oct 31. I came across this unusual statistic: new licenses of 3D Inventor (13,000) were overwhelmed 7:1 by new licences for Mechanical (93,000), a 2D AutoCAD add-on. AutoCAD LT's 3:1 out-licensing of AutoCAD is embarrassing enough that Autodesk has stopped publishing LT's numbers. Is Alibre being proved right in staking its future on lower-cost MCAD? For years, Autodesk has repeated that only 10% of its customers are using 3D CAD. It's been spun as a huge opportunity financially, because Autodesk makes 2.3x more revenue from software it calls "3D" than from 2D. But Wall Street analysts are increasingly probing Autodesk executives as to why the 10%-figure is not increasing, as you'll read in the Q&A below.
Q&A [The following Q&A is paraphrased.] Q: [The 3D installed base is] still around the 10% level? A: The denominator is the problem with this equation. The 2D revenue and 2D installed base just keeps growing, and so it makes it hard to make a meaningful impact on [the 3D percentage]. Our 3D for the most part been living up to or exceeding our expectations; in many cases, though, 2D revenue and 2D seats has exceeded our expectations.
Q: In the past you said to get to the inflection point [where 3D licenses make significant gains on 2D], you see a need [for 3D] to be somewhere around 20%, because it becomes a competitive disadvantage for people not to have it. Given that both the numerator and denominator are increasing, do you think you can get that inflection point sooner? A: I've always been a bit loath to talk about inflection points, particularly as you guys like to draw hockey stick-like inflection points. Remember that the switching costs are difficult, and so there's a natural kind of friction coefficient. There's a difficulty in adding [3D] too quickly, and so it's not something where-- This is not like a consumer product, where the market is going to rush out tomorrow and we'll get to 70%. So I can imagine seeing an acceleration, but I still don't envision that kind of inflection point.
Q: AutoCAD LT is your second biggest product, typically does around US$300 million a year, but lately hasn't been growing meaningfully. What do you think the long-term growth can be for your second largest product? A: I would plunk it in the middle to the high end of double-digits, 15 to 17%, Just above what the corporate growth targets are. That should be something that's sustainable over a reasonable period of time. - - - Q: Inventor was kind of down in the 10,000 per quarter for the last two quarters, and they've jumped up this quarter. What's changed? Because last quarter manufacturing in the US was softer, so, what are you seeing that's changed to maybe help that growth? A: In each of our 3D products, there is some variability quarter-to-quarter. Things like product releases make a big difference. As people move through the subscription renewal process, new seats sometimes go along with that. We sell a product during a particular quarter, and during the next quarter we often see that our channel partners have a greater need to service and train and customize those products. So you often see an alternating between big leap forward and then a little gradual slowing down as there's some adoption and customization and training of the customer base.
Q: You seem to be experiencing continued strength in manufacturing. Could you categorize the competitive environment that you see vis-a-vis the Dessaults and PTCs of the world? A: Many of our competitors are choosing to focus on other parts of the manufacturing industry: PLM solutions [for Dassault] or technical documentation [for PTC]. But most of them are not really focused on the design and engineering business [as we are]. And that tends to be a place where we continue to win share.
Q: Could you say specifically from whom you are gaining marketshare? A: I think in most markets, from almost every competitor. For example, if you were to look at some of our manufacturing competitors and take out some parts of their business in which we don't complete, and instead look at their core CAD offerings, you're seeing growth in anywhere from low single digits to low double digits. And so that would be an instance of where we're gaining share. If you look at the building or infrastructure industry, we're gaining share there.
Q: There's been some concern at the macro level about manufacturing slowing down results at Caterpillar and others. How do you deal with that? A: We are not exempt from macroeconomic trends. However, I think people try to read too much into weekly, monthly, quarterly results. The decision to add 3D technology, to start replacing physical prototypes with digital prototypes, to doing more analysis and simulation-- That's a long term commitment you make and I don't think people make those decisions lightly. Nor are they influenced necessarily by more volatile economic data.
Q: Can you talk about PLM. Does that start to come into effect in 2008, or is that more a 2009 event? A: I choke on that acronym. I have a difficult time with the PLM acronym. If I were to believe anybody's estimates, it should be about a $20 or $30 billion market by now. And by any estimate, it's probably no more than $1 billion. While I think there is a long-term market for PLM, I think many people are chasing a gold ring that may never show up. The reports [from 2000] had this market painted huge by this time [in 2006]. And we haven't invested nor believed in that vision of where the market is going. We believe there are ancillary processes. There are other jobs involved in design and engineering. So we continue to be focused on processes that are much closer to the design and engineers who are our core customers. - - - Q: How much of the profitability improvement in the most recent quarter came from the change in distribution fulfillment for AutoCAD and LT? How much further can you push that change in distribution economics in terms of continuing to move the discount structure, the mix structure, as far as [reseller] channel economics are concerned? A1: We are doing that because we want our resellers focused on selling the vertical products, the high end products rather than taking orders for AutoCAD. A2: Our quarters are offset with some of the distributors and resellers that report publicly [such as Avatech]. Some of those incentives that we put in place are backend-loaded. But if you take it and average it over any reasonable period of time, we are distributing the same amount of money to our distribution partners. We remain committed to making sure that the channel is strong and healthy, and that they are doing the things that we want in terms of promoting our 3D products. - - - Q: Overall Japan did grow a little bit. However, there were still issues with Inventor. Why does it continue to be weak in Japan, and what are you doing about it? A: The 3% growth is nothing that we're satisfied with. We talked about it being a multiple-quarter issue to rectify. I think it revolves around a number of things:
As well, I think there are some factors culturally how the Japanese have been adopting 3D technology. We've seen similar issues with some of our competitors. - - - Q: It looked like the total AutoCAD installed base in the press release for last quarter was a little bit different than the previous press release. And the same thing for Inventor. A: I can get back to you on that. I don't have last quarter's release in front of me.
Q: If you look back over the last three quarters, [Wall] Street has been nervous about your business, because of the smaller upgrade pool. I know you don't want to talk about that, but the smaller upgrade pool puts more pressure on some of the results. A: [The number of customers upgrading] will continue to diminish as subscriptions increase.
Q: Is it safe to say that the size of the obit pool [software products that can no longer be upgraded] will actually be up next year? A: We expect to see an increase in the combination of subscriptions and upgrades, rather than pull out the specific component and try to model it too closely. - - - Q: This has been another outstanding quarter for Revit, nearly 100% growth year-over-year. Can you comment on any particular geography driving that? It seems like in some of these 3D products, where there's a little less competition, the growth in the 3D segment is outpacing others. Is this due to lack of competition, or is it really just driven by the overall adoption of Revit? A: First of all, Revit is not without competition. It certainly has strong competition in lots of parts of the world. But it is kind of game shifting technology. The Revit technology is head and shoulders above what any of the competitors can offer. - - - Q: A question on the guidance for next year. I think you're assuming mid-teen growth, and maybe you can walk us through some of the assumptions. A1: We expect that 2D stays healthy for a long time. It's going to be double digit growth for a long time. It doesn't go away. There's many cases where 2D makes a lot of sense, very productive, very quick. You know, it automates the drafting and drawing process. And it doesn't always make sense to sit there and do a [3D] model. So, 2D will stay strong. 3D will grow more quickly, though, and we're going to continue to get customers to convert to 3D, and probably double the rate of 2D. The emerging markets [Eastern Europe, Latin America, China, and Inda] are 15% of revenue, and that percent is going to keep rising. A2: And we continue to have very good performance in our subscription business. http://www.autodesk.com/investor A summary of CAD industry news you may not have read elsewhere, or that I found interesting: - - - Evolve Consultancy launches its third annual UK Architectural, Engineering & Construction CAD Manager's survey at www.evolve-consultancy.com/interactive/CADSurvey2007.html . In the new year, the results will be released and you can find out how under-paid you are. VX's new CAD/CAM mold automation design suite integrates intelligent modeling with manufacturing and plastic processing. www.vx.com iCADsales begins shipping progeCAD 2007 tomorrow. If you bought progeCAD 2006 from them after Oct 31, you can upgrade for free.www.icadsales.com Lattice Technology announces XVL Reducer for reducing the size of 3D XVL models by automatically removing features. Stand-alone is US$12,500 or part of the XVL System Toolkit ($30,000). www.lattice3d.com Geometric Software Solutions releases GeomCaliper for Pro/E v2.0. [Is GeomCaliper at v2, or is it for Pro/E v2?] The software measures wall thickness of 3D models. geomcaliper.geometricsoftware.com/ Alibre last week shipped a new bundle that combines Adobe's Acrobat 3D software with Alibre's Design Expert for US$1,995. In effect, you get the $995 Acrobat 3D at no extra charge. www.alibre.com STAR-CCM+ V2.04 links an automated surface wrapper to CD-adapco's meshing technology. www.cd-adapco.com/ Spicer integrates ViewCafe into MatrixOne's Apparel Accelerator for Design and Development. [That's Dassault Systemes' ENOVIA's MatrixOne.] www.spicer.com CAD Schroer Group releases STHENO/PRO v2.2 drafting plug-in for Pro/E with supports for Wildfire 3.0 and DWG 2007. [How do you pronounce STHENO?] www.cad-schroer.com Buy a license of MagicTracer 2.0 from Elgorithms and get a free 1GB USB Flash Drive. (Limits: five per order, United States destinations, and purchase must be made by January 2007.) www.magictracer.com L.A. CAD next week launches SpatialGuide low-cost Web browser-pug-in for tracking and managing geospatial data in realtime. www.lacad.com - - - These news items were posted during the last week at the WorldCAD Access blog < worldcadaccess.typepad.com>:
Hardware News NROMER releases its STINGER IIi portable CMM -- Coordinate Measuring Machine. us.romer.com
People/Companies on the Move JETCAM International Holdings appoints Mike Weber as managing director. Mr Weber was previously director of new products and technology at EMC Corporation. JETCAM also appoints Beijing Luheng as their new distributor in China. SOGECLAIR and IGE+XAO Group join up to create S2E CONSULTING for selling diagnostic, consulting, and assistance services for systems and electrical engineering processes. Avatech Solutions elects Thom Waye to their board of directors. Mr Waye is managing partner and founder of Sigma Opportunity Fund. The press release notes his age is 41.
Spin Doctor of the Moment
""I think the whole industry will just laugh at it -- it's worse than
the cheapest Chinese player."
Notable Quotable
"I can't imagine not being fascinated."
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